In this paper, a new numerical simulation tool named TOUGH-FEMM is presented and applied to model three-dimensional (3D) hydraulic fracturing in porous rock. The fluid flow in both fractures and porous rock is modeled using TOUGH2, which is a well-established code for analysis of multiphase and multi-component fluid flow. Rock deformations associated with fracture propagation are modeled using finite element-meshfree method (FEMM). FEMM is an approach to simulate fracture propagation without remeshing, in which the fracture path does not need to be predetermined. Fracture mechanics with mixed-mode stress intensity factors are employed to detect fracture instability and determine the direction of fracture propagation. TOUGH-FEMM is verified for modeling fluid-driven fracture propagation in 3D through a number of simulation examples, including modeling of hydraulic fracturing laboratory experiments and by comparison to independent numerical simulation results for multiple interacting hydraulic fractures at ten to hundred meter scale.